How to cut income taxes.

• Author: Satterfield, Jessica
• Position: Business taxes

HOW TO CUT INCOME TAXES

Now that you have filed your 1991 tax return (or soon will), reducing the size of your 1992 tax bill is likely to be one of your top priorities this year. Are you missing out on tax-saving opportunities? Check the following ideas with your tax advisor. Then determine which of them might be appropriate for your financial situation.

Retirement Program for the Self-Employed

An individual with self-employment

income may establish a

qualified retirement plan--in addition

to a tax-favored IRA--and reduce

taxable income in an amount equal to

the contributions, as well as defer

taxes on all income earned by plan

assets.

Tax-Deferred Annuities

Fixed and variable tax-deferred

annuities are both outstanding

vehicles for faster money growth,

through the deferral of current income

taxes, and the potential for guaranteed

life-time income. With a tax-deferred

annuity, you normally pay no Utah or

local income tax on the interest

earned until you decide to receive

income from your annuity. If

distribution occurs during retirement,

you may be in a lower tax bracket.

Deferring Income with Treasury Bills and CDs

If a large sale of stock or other

property, retirement distribution, or

unexpected income has placed you in

a higher tax bracket this year than

you will be in next year, you can

realize tax savings by deferring

receipt of additional investment

income until next year when you

expect your tax bracket to be lower.

This may be done by purchasing a

Treasury bill or short-term CD that

will mature after the conclusion of

the tax year. At maturity, the income

will be taxed at what could be a

substantially lower tax rate.

Tax-Exempt Investments

Investing in quality municipal

bonds is a prudent way to earn high

after-tax income, while easing your

current tax burden. The appeal of

"municipals" generally increases as

your tax bracket rises.

Growth-Oriented Investments

Growth-oriented investments, such

as common stocks, provide the bulk

of their return in the form of

appreciation rather than current

income. Since little or no current

income is generated, investing in such

assets can be an effective method to

save on current income taxes.

Gift Tax Exclusion

The $10,000 federal gift exclusion

enables you to give away that amount

in cash or property each year to as

many individuals as you like, free of

gift tax. In appropriate situations, the

gift tax exclusion can be an effective

tax-saving strategy.

Gifts to Minors

While the annual gift tax

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